Special Provision for Jointly Owned Single Home by Married Couples for Comprehensive Real Estate Tax, Applications Accepted from the 16th to the End of This Month

[Sejong= Asia Economy Reporter Kim Hyunjung] To apply for this year's comprehensive real estate tax (종합부동산세) exclusion from aggregation or special taxation for couples jointly owning one house, applications must be submitted via Hometax or in writing from the 16th to the end of this month.

The National Tax Service announced on the 14th that it has sent guidance letters to 460,000 people expected to apply for exclusion from aggregation and special taxation to reflect these in the regular comprehensive real estate tax notice in November. The targets for exclusion from aggregation are 296,614 people, special taxation for couples jointly owning one house are 128,292 people, and voluntary/automatic cancellation of rental housing are 32,820 people.

The exclusion from aggregation targets include rental housing meeting certain requirements such as exclusive area and publicly announced price, employee housing (including dormitories and unsold houses), and land for housing construction acquired by housing builders. If taxpayers holding such real estate submit an exclusion from aggregation report, the relevant real estate will be excluded from the taxable base in the November regular notice (payment due December 1?15), and the comprehensive real estate tax will be imposed accordingly. If an exclusion report was previously submitted and there are no changes in ownership or area, reapplication is not necessary. However, if requirements are no longer met due to rental housing deregistration, a ‘removal (including taxable)’ report must be submitted.

Changes from last year include that with the abolition of short-term rental and long-term general apartment purchase rental housing types, rental housing that was automatically deregistered or voluntarily deregistered failing to meet mandatory rental period requirements will not have previously reduced comprehensive real estate tax amounts reclaimed. However, if rental housing previously reported for exclusion was deregistered as of June 1 this year, a ‘removal (including taxable)’ report must be submitted. Apartments applied for registration (purchase rental) cannot receive exclusion from aggregation, but long-term general apartment construction rental housing can be excluded.

Corporations, etc., that applied for rental registration after June 18 last year for long-term general private purchase rental housing in regulated areas (excluding construction rental housing) are not eligible for exclusion from aggregation. Since the taxpayer of trust property changed from trustee to trustor, exclusion from aggregation reports must be submitted by the trustor taxpayer starting this year.

A special provision allowing couples jointly owning one house to apply the one household one householder calculation method was newly established this year. The deduction amount is 1.1 billion KRW, and tax credits are available if the owner is aged 60 or older and has held the property for more than 5 years. As of June 1 this year, the couple must be residents (individuals with a domestic address or residing more than 183 days) jointly owning only one house, and no other household members may own a house. Couples jointly owning one house should refer to the simplified tax calculation program posted on Hometax to evaluate benefits. If there are no changes after the initial application, the special provision continues without additional application. The spouse with the larger ownership share is the taxpayer, and if shares are equal, either may choose. Using Hometax allows convenient non-face-to-face reporting (application) with services such as ‘pre-fill.’

Notably, from this year, the highest single tax rates for comprehensive real estate tax (3%, 6%) apply to houses owned by corporations or entities regarded as corporations, but some corporations such as public housing operators can apply the same general progressive tax rates as individuals upon application.

If it is confirmed after applying exclusion from aggregation or special taxation that the requirements are not met, the reduced tax amount and penalties must be additionally paid.

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